Chapter 7, married filing single, possible tax refund

[tcreegan]

Hi again NewPage,

Don't let the Discover lawsuit panic you into doing something worse in the BK. Out of the frying pan into the fire so to speak. The $137 filing fee for an answer that buys you enough time to get the tax refund spend might be a wise investment. Even if they get a judgment, they have to take additional steps to start collecting on it.

Hang in there,

Tom in Colo

[NewPage]

Because the refund was going to pay the first quarter taxes for us. It's a challenge to come up with the money to do that, sometimes.

Discharged debt will be around 40k

[justbroke]

I don't know what would specifically work in your District. Why are you so attached to this tax refund? How much are you expecting to discharge? It may actually be worth losing the refund to discharge, say, $1,000,000 of debt!

[NewPage]

LOL You're right, I am!

I think then, that I may have to file an answer to the Discover suit, file taxes, take care of the refund/2011 quarterly taxes, then file BK.

OR --

Let Discover get their judgment, and deal with it in the BK. That would work, right?

[justbroke]

You may not disburse any IRS refund after you filed! Once you file, the anticipated refund is property of the estate! Unless you have -- validly -- exempted it from the Estate, you can't spend it down!

I think you're looking for ways to quickly file, yet get to use your anticipated refund. I think that you may be grasping at straws.

[NewPage]

Well, that would be the last thing I'd need, is trouble from the IRS. I have a relative that works there, one well-versed in the legal side of things. I will contact them and get their input -- but yeah, you are probably right.

IRS won't accept returns until January 14 anyway at the earliest, so we have this coming week to hope that our mortgage things get here.

My attorney had mentioned, at our initial meeting, that I could do an "emergency filing", where they get a case number and then have like 2 weeks to get everything in -- but it would stop collection action.

So now I'm wondering if I could:

1) File emergency BK on January 25 to stop the Discover default judgment

2) After that (or maybe before, if mortgage info arrives) file taxes

3) Receive and disburse the refund prior to the 341, keeping careful records of course

I'm emailing this to the attorney.

[justbroke]

This is so stupid. We were never planning anything other than paying 2011 estimated taxes with the refund. Why it has to be this gigantic freaking hassle I don't know. AGH!!

Simply because it's an asset and the bankruptcy prevents it. It seems simple to just have the IRS keep it in anticipation, but it's just not allowed.

I would seriously be speaking with an asset protection attorney that specializes in bankruptcy and business. I'm not sure the way you are thinking is the way to go. I am not an IRS Agent, but filing a tax return that you know to be false, even if you are still due a refund or additional refund, is still against the law. I believe it's called a frivolous tax return. I can't provide legal advice on it, but you may want to seek professional advice on the matter.

[NewPage]

My husband wondered tonight about filing the 2010 return now, and then when we receive the mortgage interest papers (1st and HELOC), which is all we are waiting on (no W2's), file an amended return. I think the only thing that makes a difference on is our state taxes, not the federal.

If we did that, filed the returns now and then did amended ones down the road, but put wheels in motion to get the bulk of the refund ASAP, would we be able to spend the refund (taxes, living expenses) if it arrived before the 341 but after filing? Am I making sense? Basically I just don't want to delay filing the BK any further. Even if we did that and the trustee said: "Oh, that additional $200 on your amended return, that belongs to me now" - I could deal with that.

This is so stupid. We were never planning anything other than paying 2011 estimated taxes with the refund. Why it has to be this gigantic freaking hassle I don't know. AGH!!

[NewPage]

From what I can gather, it would be $137 to file an answer. Does that sound right?

CIVIL FILINGS
Defendant:
Filing or appearance ("default fee" under ORS 21.110 (6)(a)) CVL6 197.00
Second, and each additional responding party ("default fee") CVLD 197.00
Claim of $10,000 or less CVL4 137.00

My suit is for 5200 and change, so I guess would fall under the 10k or less?

[NewPage]

You are giving me food for thought, Tom. I've wondered too about filing an answer, etc. I wonder if that would be prohibitively expensive.

[tcreegan]

Hi again NewPage,

The Discover suit should be easy to stall, for months. Wait 28 out of the 30 days, then file an answer. Ask for something, verification of debt, original signed agreement, final statement, something. New wait time, repeat. Even once they get the judgment, they have to file a writ of garnishment, another response time, etc

In an earlier post I thought ORS 18.348 would give you a 7,500 exemption amount, but I think that actually is 7,500 from the sale of exempt property. Ordinary cash-in-the-bank is $400

So I guess you are left w/ spend or lose it. Be sure to ask your attorney about paying forward on the taxes; how far forward can you pay b4 the trustee will squawk about it. You can also get medical/dental/vision work done, car repairs, other legit expenses.

Good luck w/ this,

Tom in Colo

[NewPage]

I wondered that myself.

[october99]

If your spouse is not filing bk with you then wouldn't 1/2 of the refund be his and therefore off-limits? That's how other assets would work, so I'm confused why it isn't the same with the tax refund.

[NewPage]

I'm writing the response email now:

Yes, the Discover suit is to collect on a delinquent credit card. I'm assuming that if I don't respond by the time the stated 30 days is up, they receive a default judgment in their favor. I am not employed, so have no wages to garnish. I have a checking and savings account in my name, neither of which have much in them and no likelihood of having anything significant added to them. If Discover receives a default judgment, will that be discharged in the bankruptcy when it is filed?

At this time I have no notice of suits from any other creditors.

I'm going to discuss filing the tax return immediately with my husband, and let you know our decision. I'm assuming then that my petition would be put on a back burner, so to speak, until the refunds are received and disbursed to federal and state tax entities? I understand that using the refunds would need to be very carefully documented to show exactly where every cent went.

If we file taxes now and receive and pay out the refund amounts in February, is there any issue with paying the first quarter's estimated taxes before the April 15, 2011 due date? What I'm thinking is that we would go with the above scenario, and then after tax payments are sent (hopefully in February), to go ahead and file the bankruptcy.

Opinions? Would it be okay to pay taxes prior to their due date? Is that a big deal? Usually Turbo Tax says "pay xxxx" for each quarter, so we'd pay whatever that amount is to federal and state, and then if there was any left we'd pay some utilities or something.

[tobee43]

newpage....can you ask your atty even IF discover card does successfully obtain a judgment prior to your filing; if you cannot file a motion to vacate after your discharge???? unless it's different in your state...but most times, with a few exceptions, even if a judgment was granted you can get them removed.